US Senate may soon see new, milder climate bill - sources

01 March 2010 22:10[Source: ICIS news]

WASHINGTON (ICIS news)--A new climate bill may be floated this week in the US Senate, featuring a gradual industry-by-industry approach to reducing greenhouse gases (GHG) but abandoning an economy-wide cap-and-trade tactic, sources said on Monday.

Senators John Kerry (Democrat-Massachusetts), Lindsey Graham (Republican-South Carolina) and Joe Lieberman (Independent-Connecticut) are said to be close to issuing a working paper of key elements for a new climate bill, although not a formal piece of legislation.

Their effort is said to be designed to avoid the controversial and deal-killing central element of earlier legislative efforts to craft a climate change bill - that is, a federal mandate to cap current greenhouse gas (GHG) emissions and gradually reduce them through an emissions permit trading system.

That so-called cap-and-trade approach triggered wide opposition among ?xml:namespace>US industries, including utilities, agriculture, energy producers, refiners, chemical makers and the broad range of other manufacturers who worried that such an economy-wide approach would burden them with massive energy cost increases.

The measure expected from the three senators would call for aggressive reductions in US emissions of greenhouse gases but would present a measured and slower approach, perhaps beginning with electric utilities and then gradually moving on to encompass other sectors, such as manufacturing, mining, transportation and agriculture.

In each segment of the economy, entities that emit greenhouse gases would be given flexibility and time to reach targeted emissions cuts.

While the three senators' bill would advance renewable energy resources such as wind and solar, they also want it to accelerate funding and permitting for nuclear power and investments to stimulate clean coal technologies, chiefly carbon capture and sequestration, according to sources.

In addition, in a bid to attract more support from Republicans who almost uniformly opposed earlier climate bills, the new proposal would provide for widespread onshore and offshore oil and natural gas exploration and development.

US energy, chemical and general manufacturing interests have complained that the administration of President Barack Obama has purposely put environmental and procedural roadblocks in the way of renewed US offshore drilling.In theory, a climate bill that would serve to open more offshore and onshore areas to development could bring some earlier opponents on board, said sources on Capitol Hill.

The US petrochemicals sector and downstream chemical makers are heavily dependent on natural gas as both a feedstock and power fuel.

However, an energy sector analyst said that the three senators are still having difficulty in coming up with a carbon pricing mechanism that will attract bipartisan support in Congress and the backing of industries.

Frank Maisano, a senior principal with the Bracewell & Giuliani law firm in Washington, DC, also said that the difficulty in finding common ground on a pricing mechanism and other aspects of a go-slow emissions reductions approach could delay the three senators’ plans for introducing a new bill until April.

The longer the three senators delay introducing a new compromise climate bill, the less likely it is to gain broad congressional support, much less pass.

With elections looming in November, many members of Congress may be unlikely to act on such a controversial and complex legislative item as climate change.